Correlation Between NISSAN CHEMICAL and Altria

Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and Altria at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NISSAN CHEMICAL and Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NISSAN CHEMICAL IND and Altria Group, you can compare the effects of market volatilities on NISSAN CHEMICAL and Altria and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NISSAN CHEMICAL with a short position of Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and Altria.

Diversification Opportunities for NISSAN CHEMICAL and Altria

0.32

Correlation Coefficient

NISSAN CHEMICAL  Altria

Weak diversification

The 3 months correlation between NISSAN and Altria is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group and NISSAN CHEMICAL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NISSAN CHEMICAL IND are associated (or correlated) with Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and Altria go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and Altria

Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the Altria. In addition to that, NISSAN CHEMICAL is 1.52 times more volatile than Altria Group. It trades about -0.03 of its total potential returns per unit of risk. Altria Group is currently generating about 0.08 per unit of volatility. If you would invest  3,478  in Altria Group on October 9, 2024 and sell it today you would earn a total of  1,665  from holding Altria Group or generate 47.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

NISSAN CHEMICAL IND  vs.  Altria Group

NISSAN CHEMICAL IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSAN CHEMICAL IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Altria Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altria Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Altria exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSAN CHEMICAL and Altria

The main advantage of trading using opposite NISSAN CHEMICAL and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, Altria can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Altria will offset losses from the drop in Altria's long position.

The idea behind NISSAN CHEMICAL IND and Altria Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.